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NATIONAL RETAIL PAYMENT SYSTEM & Proposed Payment Systems Act (House Bill No. 6197 & Senate Bill No. 3207)
Presentation to Payment Providers and other Stakeholders The Lounge, BSP Executive Business Center
BSP Complex, Mabini, Manila
14 March 2016
I. National Retail Payment System (NRPS) A. Rationale
B. What is NRPS and its Objectives
C. NRPS Vision
II. The Proposed Payment System Act (PSA) A. Policy Objectives
B. Salient Features
AGENDA
I. NRPS (National Retail Payment System)
36%
of the 1,634 cities and municipalities do not have a banking office
With at least one banking office Unbanked
archipelagic barriers pose a big challenge to financial access
of adults have an account at a formal financial institution
31.3% of adults had a loan in a formal
financial institution in the past year
11.8%
42%
68%
of the total number of deposit accounts
of the total amount of deposits
are concentrated in NCR
A. Rationale – Financial Access
• Of the 2.5 billion monthly transactions (volume) only 1% are electronic payments (BTCA)
• Only 30% have bank account, 3% with credit card and 13% a debit card (World Bank)
• Maintain multiple accounts with several banks
• Overwhelming use of checks and deployment of manual processes to pay suppliers/creditors
• Small but formal businesses are not able to use checks
• Key barrier for electronic payments - limited level of financial inclusion, intertwined with the sheer size of the informal sector
A. Rationale – Current Situation
2.5 Bn monthly transactions only 1% are made via electronic means *
• ATMs used mainly for cash withdrawals
• Mobile money served as cash servicing through agents
Limited interoperability among Payment Service Providers
• Limited interbank fund transfer
• High cost of moving funds
• Slow flow of funds
• Lower productivity
Electronic access to Interbank Fund Transfer facility is not generally available
A. Rationale - Challenges
* BTCA study 2013/2014
Low adoption of e-payments B2B, B2G, B2P P2B, P2G, P2P
NRPS
A policy and regulatory framework which aims to establish a safe,
efficient, reliable and affordable retail payment system in the
Philippines
* Enables effective and efficient interface and interoperability among players
* Fosters innovation and new business models
* Facilitates the provision of a wide range of products and services with needed
certainty, affordability and trust
*Ensures transparency
B. The National Retail Payment System (NRPS)
Goods and Services
Remittances
Debits and Other Credits
Proceeds of Loans and Investments
(interests)
Bills Payments
Taxes and Licenses
Electronic Fund Transfers
Salaries, Allowances, Commissions
-11h -10h -09h -08h -07h -06h -05h -04h -03h -02h -
01h 00h
+01h +02h +03h +04h +05h +06h +07h +08h +09h +10h +
11h
NRPS
C. NRPS Vision
Current E-Payment System
CLEARING
1 Instruct to pay merchant/recipient, net of tax
2 Forward instruction
SENDING INSTITUTION
SENDER
6
Settlement
3 Route message to Receiving FI
4 Credit to account
5 Submit net clearing results for settlement
RECEIVING INSTITUTION
RECIPIENT
6 Settlement
BSP
Settlement
C. NRPS Vision – Electronic Payment
1 FI credits
Account of Client
2 Client has option to
pay for goods electronically via any digital device
3 Client instructs his/her bank to pay Merchant
6 Merchant releases goods to
Client
4 Client’s bank
transfers fund to Merchant’s bank
account
5 Bank notifies Merchant that account was credited
E Merchant instructs bank to pay amount to Distributor’s bank
A. Shop orders supplies from Distributor
B. Distributor sends Sales Invoice to Merchant
F Merchant’s bank transfers fund
to Distributor’s bank account
G Bank notifies Distributor that account was credited
C. NRPS Vision – Increase Access to Finance
Client
Merchant
Distributor
II. Proposed PSA (Proposed Payment Systems Act)
House Bill No. 6197 - Sponsor: Rep. Sonny Collantes - Passed Third Reading (Sixteenth Congress)
Senate Bill No. 3207 - Sponsor: Sen. Bam Aquino - Pending at the Senate Committee level
Policy Objectives
Safe, efficient and reliable
payment systems
Stability and effectiveness of monetary and
financial system
Control
systemic
risk
Sustainable economic
growth
Salient features
Roles of BSP
Oversight
Supervision and Regulation
Enforcement
Designation of payment systems
Criteria
Effects
Payment System
Management Body
Members = participants
Self-regulating
Enforce rules
Operations of payment systems
Responsibilities of participants
Finality and Netting
Q & A